The Government of Maharashtra’s decision to scrap the Re 1 Crop Insurance Scheme marks a significant shift in agricultural policy. Introduced in 2023 with the intention of making crop insurance highly affordable, the scheme quickly ran into serious implementation challenges—ultimately leading to its discontinuation and a return to the Pradhan Mantri Fasal Bima Yojana.
Background: A Farmer-Friendly Initiative
The Re 1 scheme was designed to remove financial barriers for farmers:
- Farmers paid only ₹1 as premium
- The government covered the remaining cost
- Aim: Increase insurance coverage and protect farmers from crop loss
At its core, the scheme attempted to ensure that even the smallest and most vulnerable farmers could access risk protection.
Surge in Applications and Emerging Red Flags
The response to the scheme was massive—but alarming:
- Applications jumped from 96 lakh (2021–22) to 2.42 crore (2023–24)
- Investigations uncovered 5.82 lakh bogus claims in 2024 alone
This sudden spike raised concerns about misuse and systemic loopholes.
How Fraudulent Claims Occurred
A large portion of fraudulent claims followed similar patterns:
- Use of fake identities
- Manipulation of land ownership records
- Claims filed for non-agricultural or government land
Many of these activities were linked to Common Service Centres (CSCs), where operators allegedly submitted applications without the knowledge of actual landowners. In some cases, claims were even made on land owned by religious institutions or the government.
Government Response and Investigation
Once the scale of fraud became clear, the Maharashtra government acted:
- Conducted physical field inspections
- Introduced stricter verification systems
- Formed an expert committee to assess the scheme
The committee concluded that the scheme’s design made it vulnerable to misuse and recommended discontinuation.
Financial Impact of the Cancellation
Scrapping the scheme is expected to bring substantial fiscal relief:
- Estimated savings: ₹5,000–₹6,000 crore annually
- Planned reinvestment: ₹5,000 crore per year for 5 years
These funds will be redirected toward:
- Farm mechanisation
- Irrigation systems
- Storage and infrastructure development
This shift reflects a move from subsidy-heavy support to long-term capacity building.
Return to PMFBY: A More Structured Approach
The government has reinstated the Pradhan Mantri Fasal Bima Yojana, which offers:
- Shared premium between farmer, state, and central government
- Established verification mechanisms
- More controlled and monitored implementation
With improved safeguards, the aim is to rebuild trust in the crop insurance system.
Future Outlook
The future of crop insurance in Maharashtra will depend on:
- Robust verification processes
- Transparent digital systems
- Ensuring benefits reach genuine farmers only
While the Re 1 scheme was ambitious and farmer-centric, its execution challenges highlight the importance of balancing accessibility with accountability.
Conclusion
The rise and fall of the Re 1 Crop Insurance Scheme serves as a critical lesson in policy design. Making schemes affordable is important—but ensuring proper implementation and fraud prevention is equally essential.
By returning to a structured model like PMFBY and investing in agricultural infrastructure, Maharashtra aims to build a more reliable and sustainable support system for its farmers.
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